HBD gets £23.7m loan for 200,000 sq ft Manchester office

Colloco is the latest commercial scheme to benefit from a cash injection from the Greater Manchester Combined Authority’s £2bn Good Growth Fund.

Developer HBD secured planning permission for the 200,000 sq ft Colloco in 2024. The 16-storey, blue-clad office would be constructed on the corner of New Quay Street and Gartside Street on the site of LTE Group’s former Manchester College.

In the two years since getting planning approval, HBD has been looking for a way forward for the EPR Architects-designed project but “adverse market movements which have reduced values” have made the scheme unviable, according to a GMCA report.

There is currently only one speculative office development on-site in Manchester – Landsec’s Republic at Mayfield – highlighting the difficulties being faced by office developers at present.

Build cost inflation, high interest rates, and “more cautious investment assumptions”, have also held Colloco back, the GMCA report states.

As a result, the combined authority is stepping in to provide a £23.7m loan “on below-market terms” that it is hoped will plug the viability gap and leverage in private sector capital to deliver the project.

Colloco’s funding allocation follows the GMCA’s search for stalled commercial and residential schemes with a “clearly evidenced viability gap which can be addressed through recoverable, below-market interest rate loans”.

The three schemes selected through that call for sites – Colloco, Salboy’s 71-storey Viadux 2, and McGoff’s 153-bed Rochdale Road BTR – are all deemed to have a lower risk profile than other projects selected for allocations from the Good Growth Fund to date, due in part to their being located in Manchester city centre, where values are higher than in outlying boroughs.

HBD and GMCA were contacted for comment.

The Good Growth Fund was set up last year to address viability gaps identified in schemes across Greater Manchester’s 10 boroughs. It provides flexible funding solutions, including loans and patient equity, using public monies from the GMCA and National Wealth Fund, as well as private capital from the Greater Manchester Pension Fund.

To date allocations totalling £800m for 30 schemes have been made including the £90m for the Carrington Relief Road and more than £40m for the conversion of the Kendal Milne building on Deansgate into offices.